Unfair Terms in a Contract Act 1977

The act does not have a definition for ‘ Business’ but provides that business includes ‘ a profession and the activities of any government department or local or public authority’ (Furmston, 2007, 232). As stated previously UCTA does not cover every type of contract, the excluded types are located in Schedule 1 of UCTA, including; contracts of insurance, transfer of an interest of land, intellectual property, the formation or dissolution of a company. (Koffman and Macdonald, 2007, 211). UCTA is divided into three parts, part one applies to England, Wales and Northern Ireland, Part 2 applies to Scotland and part 3 applying to the whole of the UK (Furmston, 2007, 232) Section 2 to 7 are the main engaging provisions of part one, they apply to business liability.

Section 6(3) is the one exception but is minimal in use as exemption clauses are relatively unusable in none business sales and fewer terms are implied into a sale where the seller is not a merchant (Furmston, 2007, 232). The main scope of the act is the requirement of reasonableness (s. 2), it is an important and widely applicable section, as it deals with the liability arising from negligence (s. 1) (Koffman and Macdonald pg212).

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Only clauses which fall subject to the requirement of ‘ reasonableness’ will be subject to the test, elements of a clause which are prohibited by the act will not be subject to reasonableness. The test for reasonable is located under s. 11 UCTA. In relation to a contract term, the requirement of reasonableness is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made.

The exclusion of negligence which results in the personal injury or death of another party is prevented by s. 2(1). This was illustrated in the case of Thorton v Shoe Lane Parking Ltd [1971] 1 All ER 686 where Mr Thorton suffered the injury at the result of Shoe Lane Parking Ltd, which was covered by an exclusion clause.